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The Early Exit Secret Nobody Talks About

by | Jan 27, 2026

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Most traders think you need to hit your price target to make money on an options trade.

Not true.

In fact, there’s a specific quirk of out-of-the-money (OTM) debit spreads that lets you bank serious profits — even when you’re still completely out of the money.

And once you understand this dynamic, it completely changes the way you manage your positions.

Here’s the setup: When you buy an aggressive OTM debit spread, your cost basis is pretty extreme.

You’re paying pennies on the dollar for a shot at a big move.

But if the underlying stock or ETF moves early in the trade, that early movement can double or even triple your position before you’re anywhere close to your final target.

If they move early in the trade, sometimes the return on investment (ROI) is substantial just because the cost basis is more extreme.

Obviously, later in the trade, that comes back to hurt you, because if you’re still out of the money, you’re losing value quickly.

Let me give you a real example I was looking at recently on the Financials ETF (XLF).

The $54.50 / $55.50 spread was trading at about 31 cents with an expiration three weeks away. Now, if XLF moves up to $55 — which is about a 2.5% to 3% move — that spread could probably be close to 100% already on that trade.

Even if we move up a dollar, you’re looking at huge gains on the position, and you haven’t even gotten close to full profit potential yet.

So what do you do with that?

Take Risk Off the Table Early

This is where the magic happens…

Let’s say you take 10 contracts, maybe take six off, taking all your risk off the table.

You lock in that early profit on the majority of your position, and now you’re holding the remaining contracts with zero risk.

If the trade keeps moving, great — you still have exposure. If it fades, who cares? You already booked a winner and removed your initial capital.

You could close all the contracts, or a majority of your contracts, half your contracts, whatever you’re comfortable with, lock in some of that profit and then hold on to see if we get any more follow-through with the last couple weeks of the trade.

That’s how you turn a lower-probability directional bet into a positive expectancy trade.

You’re not hoping for the home run anymore — you’re playing with house money.

The Flip Side

This dynamic works both ways.

That extreme cost basis that helps you when the trade moves early becomes a liability if the stock stalls.

Time decay speeds up, and if you’re still out of the money, your spread can lose value fast.

The key is capitalizing on that early movement.

If you get it, take advantage. Don’t wait for perfection.

This is one of those subtle edges that separates traders who consistently book wins from traders who constantly give profits back.

It’s not about being right on direction — it’s about understanding how your position behaves at different stages of the trade.

And when you start managing your positions with that level of precision, everything changes.

Join me and Graham Lindman at 10 a.m. ET on weekdays in the Opening Playbook to explore setups like this and more.

Nate Tucci
Tucci Trades

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.

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We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading past performance is not indicative of future results. Since 1/12/24, the strategy has issued 74 closed trades, with 58 winners and 16 losers, for a total win rate of 78.4%. The average gain, winners and losers included, has been 11.07% per trade over an average holding period of 20 days.

Nate Tucci
Tucci Trades

Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!

Important Note: No one from the New Money Crew team or Tucci Trades will ever contact you directly on Telegram.

*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

Disclaimer:

We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading past performance is not indicative of future results. Since 1/12/24, the strategy has issued 74 closed trades, with 58 winners and 16 losers, for a total win rate of 78.4%. The average gain, winners and losers included, has been 11.07% per trade over an average holding period of 20 days.

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